<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to ________
Commission file number 1-9930
THE PENN TRAFFIC COMPANY
(Exact name of registrant as specified in its charter)
Delaware 25-0716800
(State of incorporation) (IRS Employer Identification No.)
1200 State Fair Boulevard, Syracuse, NY 13209
(Address of principal executive offices) (Zip code)
(315) 453-7284
(Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X . NO .
--- ---
Common stock, par value $1.25 per share: 10,859,793 shares
outstanding as of June 1, 1995
1 of 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE PENN TRAFFIC COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(All dollar amounts in thousands,
except per share data)
<TABLE>
<CAPTION>
THIRTEEN THIRTEEN
WEEKS ENDED WEEKS ENDED
APRIL 29, APRIL 30,
1995 1994
------------ ------------
<S> <C> <C>
TOTAL REVENUES $ 860,028 $ 809,961
COST AND OPERATING EXPENSES:
Cost of sales (including
buying and occupancy costs) 662,449 631,458
Selling and administrative
expenses 164,222 145,112
------------ ------------
OPERATING INCOME 33,357 33,391
Interest expense 33,034 29,024
------------ ------------
INCOME BEFORE INCOME TAXES,
EXTRAORDINARY ITEM AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 323 4,367
Provision for income taxes 194 2,111
------------ ------------
INCOME BEFORE
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 129 2,256
Extraordinary item (net of
tax benefit) (Note 4) (2,276)
------------ ------------
INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 129 (20)
Cumulative effect of change in
accounting principle
(net of tax benefit) (Note 6) (5,790)
------------ ------------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $ 129 $ (5,810)
============ ============
PER SHARE DATA:
Income before extraordinary item
and cumulative effect of change
in accounting principle $ .01 $ .20
Extraordinary item (.20)
Cumulative effect of change in
accounting principle (.52)
------------ ------------
Net income (loss) $ .01 $ (.52)
============ ============
Average number of common shares
outstanding 11,149,486 11,171,258
============ ============
</TABLE>
See Notes to Interim Consolidated Financial Statements.
- 2 -
<PAGE>
THE PENN TRAFFIC COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(All dollar amounts in thousands) UNAUDITED
APRIL 29, JANUARY 28,
1995 1995
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments $ 47,108 $ 46,519
Accounts and notes receivable
(less allowance for doubtful
accounts of $2,061 and
$1,374, respectively) 76,351 81,967
Inventories (Note 3) 393,161 385,968
Prepaid expenses and other current assets 12,542 10,913
----------- -----------
Total Current Assets 529,162 525,367
NONCURRENT ASSETS:
Capital leases - net 125,451 127,748
Property, plant and equipment - net 604,367 600,797
Intangible assets - net 449,202 451,897
Other assets and deferred charges - net 86,834 88,157
----------- -----------
$ 1,795,016 $ 1,793,966
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 4,146 $ 4,118
Current portion of obligations
under capital leases 10,129 9,962
Trade accounts and drafts payable 221,426 209,890
Payroll and other accrued liabilities 71,548 79,434
Accrued interest expense 19,245 30,686
Payroll taxes and other taxes payable 20,518 19,582
Deferred income taxes 27,384 27,384
----------- -----------
Total Current Liabilities 374,396 381,056
NONCURRENT LIABILITIES:
Long-term debt 1,149,635 1,136,302
Obligations under capital leases 125,157 126,894
Deferred income taxes 73,598 73,598
Other noncurrent liabilities 39,074 43,189
----------- -----------
Total Liabilities 1,761,860 1,761,039
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock - authorized 10,000,000
shares at $1.00 par value; none issued
Common stock - authorized 30,000,000
shares at $1.25 par value;
10,855,701 shares and 10,846,701 shares
issued and outstanding, respectively 13,568 13,558
Capital in excess of par value 179,255 179,165
Retained deficit (150,162) (149,681)
Minimum pension liability adjustment (356) (356)
Unearned compensation (9,149) (9,759)
----------- -----------
Total Shareholders' Equity 33,156 32,927
----------- -----------
$ 1,795,016 $ 1,793,966
=========== ===========
</TABLE>
See Notes to Interim Consolidated Financial Statements.
- 3 -
<PAGE>
THE PENN TRAFFIC COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
(All dollar amounts in thousands)
THIRTEEN THIRTEEN
WEEKS ENDED WEEKS ENDED
APRIL 29, 1995 APRIL 30, 1994
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 129 $ (5,810)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Cumulative effect of change in
accounting principle 5,790
Depreciation and amortization 18,892 17,983
Amortization of intangibles 4,253 3,723
Other - net (1,037) (3,954)
Net change in assets and liabilities:
Accounts receivable and prepaid expenses 3,300 (2,015)
Inventories (7,193) (2,244)
Accounts payable and accrued expenses (6,855) (35,820)
Deferred charges and other assets 358 1,915
--------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 11,847 (20,432)
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures (22,467) (15,424)
Other - net 2 (226)
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES (22,465) (15,650)
--------- ---------
FINANCING ACTIVITIES:
Payments to settle long-term debt (839) (39,392)
Borrowing of revolver debt 173,600 107,400
Repayment of revolver debt (159,400) (68,500)
Reduction of capital lease obligations (2,254) (1,904)
Payment of debt issuance costs (263)
Other - net 100 114
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 11,207 (2,545)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 589 (38,627)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,519 82,467
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 47,108 $ 43,840
========= =========
</TABLE>
See Notes to Interim Consolidated Financial Statements.
- 4 -
<PAGE>
THE PENN TRAFFIC COMPANY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The results of operations for the interim periods are not necessarily
an indication of results to be expected for the year. In the opinion of
management, all adjustments necessary for a fair presentation of the results are
included for the interim periods, and all such adjustments are normal and
recurring. These unaudited interim financial statements should be read in
conjunction with the consolidated financial statements and related notes
contained in the Annual Report on Form 10-K for the fiscal year ended January
28, 1995.
Net income (loss) per share of common stock is based on the average
number of shares of common stock outstanding during each period, after giving
effect to preferred stock dividends. Fully diluted income per share is not
presented for each of the periods since the reduction from primary income per
share is less than three percent.
In January 1995, the Company acquired 45 supermarkets from American
Stores Company formerly operating under the Acme trade name. Results for the
quarter ended April 29, 1995 include results for 34 of these acquired Acme
stores that the Company intends to continue to operate.
- 5 -
<PAGE>
NOTE 2 - SUPPLEMENTAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(in thousands of dollars)
First Quarter, Fiscal 1996
- --------------------------
<S> <C>
Operating Income $ 33,357
Depreciation and Amortization 23,145
LIFO Provision 0
Cash Interest Expense 31,964
<CAPTION>
First Quarter, Fiscal 1995
- --------------------------
<S> <C>
Operating Income $ 33,391
Depreciation and Amortization 21,706
LIFO Provision 25
Cash Interest Expense 28,013
</TABLE>
NOTE 3 - INVENTORIES
If the first-in, first-out (FIFO) method had been used by the Company,
inventories would have been $17,145,000 higher than reported at both April 29,
1995 and January 28, 1995, respectively.
NOTE 4 - EXTRAORDINARY ITEM
During the first quarter of fiscal 1995, the Company had an
extraordinary charge of $2.3 million (net of $1.6 million income tax benefit)
related to the early retirement of debt.
- 6 -
<PAGE>
NOTE 5 - INVESTMENT
EQUITY INTEREST IN THE GRAND UNION COMPANY
In July 1989, Penn Traffic through its limited partnership investment
in Grand Acquisition Company, L.P. ("GAC, L.P."), acquired an indirect ownership
interest in approximately 24.3% of the currently outstanding common stock of
Grand Union Holdings Corporation (formerly named GND Holdings Corporation)
("Grand Union Holdings"), the corporate parent of The Grand Union Company
("Grand Union"). GAC, L.P. owns approximately 39% of the currently outstanding
common equity of Holdings on a fully diluted basis. As of January 28, 1995,
Penn Traffic's indirect ownership interest was 17.8% on a fully diluted basis.
The Company accounted for its investment in Grand Union under the
equity method. The investment was recorded originally at a cost of $18,250,000.
The carrying value of the investment was reduced to zero as of February 2, 1991.
On January 25, 1995, Grand Union filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court, District of Delaware (the "Bankruptcy Court").
On February 16, 1995, Grand Union Holdings filed a voluntary Chapter 11 petition
in the Bankruptcy Court. Penn Traffic's equity interest in Grand Union Holdings
became worthless as a result of these bankruptcy proceedings and, on March 24,
1995 Penn Traffic's limited partnership interest in GAC, L.P. was redeemed for
nominal consideration.
NOTE 6 - CHANGE IN ACCOUNTING PRINCIPLE
Effective January 30, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS 112"). SFAS 112 requires employers to recognize the obligation
to provide postemployment benefits on an accrual basis if certain conditions are
met. The Company's postemployment benefits covered by SFAS 112 are primarily
disability related claims covering indemnity and medical payments. The
obligation for these claims is measured using actuarial techniques and
assumptions including appropriate discount rates. The cumulative effect of the
change in accounting principle determined as of January 30, 1994 reduced net
income by $5.8 million (net of $4.1 million income tax benefit) in the fiscal
year ended January 28, 1995.
- 7 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED APRIL 29, 1995 ("FIRST QUARTER FISCAL 1996")
COMPARED TO THIRTEEN WEEKS ENDED APRIL 30, 1994 ("FIRST QUARTER FISCAL
1995")
The following table sets forth statement of operations components
expressed as a percentage of total revenues for First Quarter Fiscal 1996 and
First Quarter Fiscal 1995:
<TABLE>
<CAPTION>
First Quarter Ended
----------------------
April 29, April 30,
1995 1994
-------- ---------
<S> <C> <C>
Total revenues 100.0% 100.0%
Gross profit (1) 23.0 22.0
Selling and administrative
expenses 19.1 17.9
Operating income 3.9 4.1
Interest expense 3.8 3.6
Income before income taxes,
extraordinary item and cumulative
effect of change in accounting
principles 0.1 0.5
Net income (loss) 0.0 (0.7)
<FN>
(1) Total revenues less cost of sales.
</TABLE>
Total revenues for First Quarter Fiscal 1996 increased to $860.0
million from $810.0 million in First Quarter Fiscal 1995. The increase in total
revenues is the result of the increase in retail supermarket sales resulting
from the acquisition of 45 former Acme stores in January 1995. Results for First
Quarter Fiscal 1996 include results for the 34 former Acme stores that the
Company intends to continue to operate. Wholesale supermarket sales decreased in
First Quarter Fiscal 1996 to $101.4 million from First Quarter Fiscal 1995
results of $109.2 million. Sales from retail supermarkets existing in both
periods, "same store sales," decreased 1.6% in First Quarter Fiscal 1996.
In First Quarter Fiscal 1996, gross profit was $197.6 million compared
to First Quarter Fiscal 1995 gross profit of $178.5 million, representing 23.0%
and 22.0% of total revenues, respectively. The increase is due to lower product
procurement costs combined with the relative increase in retail revenues as
compared to wholesale revenues.
- 8 -
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Selling and administrative expenses for First Quarter Fiscal 1996 were
$164.2 million compared with $145.1 million in First Quarter Fiscal 1995
representing 19.1% and 17.9% of total revenues, respectively. The increase in
selling and administrative expenses as a percentage of total revenues primarily
resulted from the relative increase in retail revenues compared to wholesale
revenues and an increase in fixed and semi-variable expenses as a percentage of
total revenues during a period of reduced same store sales.
Depreciation and amortization of $23.1 million in First Quarter Fiscal
1996 and $21.7 million in First Quarter Fiscal 1995 represented 2.7% of total
revenues in both periods.
Operating income was $33.4 million in both periods representing 3.9%
and 4.1% of total revenues in First Quarter Fiscal 1996 and First Quarter Fiscal
1995, respectively.
Interest expense for First Quarter Fiscal 1996 and First Quarter Fiscal
1995 was $33.0 million and $29.0 million, respectively. The increase is
primarily the result of higher debt levels outstanding during First Quarter
Fiscal 1996 as compared to First Quarter Fiscal 1995. The higher debt levels
outstanding during First Quarter Fiscal 1996 are primarily the result of the
acquisition of 45 stores from American Stores Company in January 1995.
Income before income taxes, extraordinary item, and the cumulative
effect of a change in accounting principle was $.3 million for First Quarter
Fiscal 1996, compared to $4.4 million for First Quarter Fiscal 1995. This
decrease resulted from a combination of unchanged operating income and an
increase in interest expense.
The income tax provision was $.2 million for First Quarter Fiscal 1996
compared to $2.1 million in First Quarter Fiscal 1995. The effective tax rates
vary from the statutory rate due to differences between income for financial
reporting and tax reporting purposes, primarily related to goodwill amortization
resulting from prior acquisitions.
The $2.3 million extraordinary item (net of $1.6 million income tax
benefit) in First Quarter Fiscal 1995 related to the early retirement of debt.
The Company adopted SFAS 112 in First Quarter Fiscal 1995. The
cumulative effect of this change in accounting principle was a charge of $5.8
million (net of $4.1 million income tax benefit) (Note 6).
- 9 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Operating income was $33.4 million for both First Quarter Fiscal 1996
and First Quarter Fiscal 1995. Interest expense for First Quarter Fiscal 1996
was $33.0 million as compared to $29.0 million during First Quarter Fiscal 1995.
Income before extraordinary item and the cumulative effect of a change in
accounting principle for First Quarter Fiscal 1996 was $.1 million as compared
to $2.3 million for First Quarter Fiscal 1995.
Payments of principal and interest on the Company's $1,154 million of
long-term debt (excluding capital leases) will materially restrict Company funds
available to finance capital expenditures and working capital. Principal
payments of long-term debt of $3.3 million, $2.7 million and $2.2 million are
due during the remainder of Fiscal 1996, Fiscal 1997 and Fiscal 1998,
respectively.
As of April 29, 1995, the Company had a revolving credit facility (the
"Revolving Credit Facility") which provided for borrowings of up to $225
million, subject to a borrowing base limitation measured by eligible inventory
and accounts receivable of the Company. The Revolving Credit Facility matures in
April 2000 and is secured by a pledge of the Company's inventory, accounts
receivable and related assets. Total availability under the Revolving Credit
Facility was $105.1 million at April 29, 1995. Effective May 10, 1995, the
Revolving Credit Facility was amended to provide for borrowings of up to $250
million subject to the borrowing base limitation.
During First Quarter Fiscal 1996, the Company's internally generated
funds from operations and amounts available under the Revolving Credit Facility
provided sufficient liquidity to meet the Company's operating, capital
expenditure and debt service needs.
The Company has entered into four interest rate swap agreements, each
of which expires within the next three fiscal years, that effectively convert
$155 million of its fixed rate borrowings into variable rate obligations. Under
the terms of these agreements, the Company makes payments at variable rates
which are based on LIBOR and receives payments at fixed interest rates. The net
amount paid or received is included in interest expense.
Cash flows to meet the Company's requirements for operating, investing
and financing activities in First Quarter Fiscal 1996 are reported in the
Consolidated Statement of Cash Flows. For the 13-week period ended April 29,
1995, the Company experienced a positive cash flow from operating activities of
$11.8 million.
Working capital increased by $10.5 million from January 28, 1995 to
April 29, 1995.
- 10 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company is in compliance with all terms and restrictive covenants
of its long-term debt agreements. The Company's debt agreements provide
restrictive covenants on the payment of dividends to its shareholders. As of
April 29, 1995, no dividend payments to its shareholders could have been made
under the most restrictive of these limitations.
The Company expects to spend approximately $150 million on capital
expenditures, including capital leases, during Fiscal 1996. The Company expects
to finance such capital expenditures through internally generated cash flow,
borrowings under the Revolving Credit Facility and new capital leases. Capital
expenditures will be principally for new stores, replacement stores, remodels
and a new distribution facility in Scranton, Pennsylvania. During First Quarter
Fiscal 1996, the Company opened two replacement stores and completed four
remodels. Eight replacement stores and four remodels were under construction or
in progress as of April 29, 1995. Capital expenditures, including capital
leases, were approximately $23.2 million for First Quarter Fiscal 1996.
- 11 -
<PAGE>
PART II. OTHER INFORMATION
All items which are not applicable or to which the answer is
negative have been omitted from this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Stockholders was held on June
7, 1995. At the Annual Meeting, three directors were elected to serve
for three-year terms on the Company's Board of Directors by the
following votes:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
John T. Dixon 9,776,890 38,235
Gary D. Hirsch 9,776,767 38,359
Richard D. Segal 9,777,366 37,760
</TABLE>
At the Annual Meeting, the selection of Price Waterhouse as
auditors for the Company for Fiscal 1996 was ratified by a vote of
9,806,155 shares in favor and 8,362 shares opposed. A total of 609
shares abstained from voting.
ITEM 5. OTHER INFORMATION
Mr. Joseph J. McCaig, President and Chief Executive Officer of
The Grand Union Company ("Grand Union"), has resigned from the Board of
Directors of the Company, effective May 31, 1995. Until March 1995,
Penn Traffic held an indirect minority ownership interest in Grand
Union.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
10.9 I Amendment No. 8, dated
as of November 4, 1994,
to the Loan and Security
Agreement.
10.9 J Amendment No. 9, dated as
of May 10, 1995, to the
Loan and Security
Agreement.
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fiscal quarter
ended April 29, 1995.
- 12 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PENN TRAFFIC COMPANY
June 13, 1995 /s/- John T. Dixon
----------------------------
By: John T. Dixon
(President and Chief
Executive Officer, and
Director)
June 13, 1995 /s/- Eugene R. Sunderhaft
----------------------------
By: Eugene R. Sunderhaft
(Senior Vice President and
Secretary - Principal
Financial Officer and
Principal Accounting
Officer)
- 13 -
<PAGE>
AMENDMENT NO. 8 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 8, dated as of November 4, 1994 (this "AMENDMENT") to
that certain Loan and Security Agreement dated as of March 5, 1993, as amended
by Amendment Nos. 1, 2, 3, 4, 5, 6 and as further amended by a certain Consent
and Amendment to Loan and Security Agreement dated September 29, 1994
(hereinafter "Amendment No. 7") (collectively the "LOAN AGREEMENT") among THE
PENN TRAFFIC COMPANY ("PENN TRAFFIC"), DAIRY DELL, BIG M SUPERMARKETS, INC., and
PENNY CURTISS BAKING COMPANY, INC. (individually a "BORROWER" and collectively
the "BORROWERS"), the Lenders listed therein (collectively the "LENDERS") and
NATWEST USA CREDIT CORP., as Agent for the Lenders (in such capacity, the
"AGENT"), is made by, between and among the Borrowers, the Agent, and the
Lenders parties hereto.
Capitalized terms used herein, except as otherwise defined herein,
shall have the meanings given to such terms in the Loan Agreement.
- - - - - - - - -
WHEREAS, both the Maximum Revolving Credit Line and the amount of the
Total Facility has been further increased from $200,000,000 to $225,000,000 as a
result of the Borrowers' compliance with and the satisfaction of the conditions
to the effectiveness of sections 1(a)(ii) and (iii) of Amendment No. 6 and
WHEREAS, Mitsubishi Trust and Banking Corporation, a current Lender
(Mitsubishi), and NWCC, a current Lender, have committed to increase the amount
of each of their Commitments and to changes in their Pro-Rata Shares.
WHEREAS, as a result of the increase in the Maximum Credit Line and
the amount of the Total Facility and certain transfers by current Lenders of all
or a portion of their interests as Lenders to other current Lenders, changes are
required to be made in the Commitments and Pro-Rata Shares of all of the
Lenders.
WHEREAS, the Borrowers, the Agent and the current Lenders have agreed
to amend the Loan Agreement pursuant to the terms and conditions set forth
herein.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. COMMITMENTS AND PRO RATA SHARES. Mitsubishi and NWCC hereby
increase each of their respective Commitment and consent to the changes in their
Pro-Rata Share as Lenders under the Loan Agreement to the extent set forth
opposite each of their signatures to this Amendment. On and after the date of
this Amendment, the Commitments and Pro Rata Shares of all Lenders (including
Mitsubishi and NWCC) shall be as set forth opposite each of their signatures to
this Amendment.
2. REPRESENTATIONS AND WARRANTIES. As an inducement to the Agent and
the current Lenders to enter into this Amendment, each of the Borrowers hereby
represents and warrants to the Agent and such Lenders and agrees with the Agent
and such Lenders as follows:
(a) It has the power and authority to enter into this Amendment, has
taken all corporate action required to authorize its execution, delivery,
and performance of this Amendment. This Amendment has been duly executed
and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms. The execution,
delivery, and performance of this Amendment will not violate its
certificate of incorporation or by-laws or any agreement or legal
requirements binding upon it.
(b) As of the date hereof and after giving effect to the terms of
this Amendment: (i) the Loan Agreement is in full force and effect and
constitutes a binding obligation of the Borrowers, enforceable against the
Borrowers and owing in accordance with its terms; (ii) the Obligations are
due and owing by the Borrowers in accordance with their terms; and (iii)
Borrowers have no defense to or setoff, counterclaim, or claim against
payment of the Obligations and enforcement of the Loan Documents based upon
a fact or circumstance existing or occurring on or prior to the date
hereof.
3. NO IMPLIED AMENDMENTS. Except as expressly provided herein, the
Loan Agreement and the other Loan Documents are not amended or otherwise
affected in any way by this Amendment.
-2-
<PAGE>
4. ENTIRE AGREEMENT; MODIFICATIONS; BINDING EFFECT. This Amendment
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written understandings about such
matter. Each of the Borrowers confirms that, in entering into this Amendment,
it did not rely upon any agreement, representation, or warranty by the Agent or
any Lender except those expressly set forth herein. No modification, recision,
waiver, release, or amendment of any provision of this Amendment may be made
except by a written agreement signed by the parties hereto. The provisions of
this Amendment are binding upon and inure to the benefit of the representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein or obligation hereunder may be assigned by any Borrower without
the prior written consent of the Required Lenders.
5. EFFECTIVE DATE. This Agreement shall become effective when
executed by the Borrowers and such number of Lenders as shall constitute the
amount of Required Lenders.
6. SEVERABILITY. If any provision of this Amendment is prohibited or
invalid, under applicable law, it is ineffective only to such extent, without
invalidating the remainder of this Amendment.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by each party in separate counterparts, each of which is an
original, but all of which shall together constitute one and the same agreement.
8. GOVERNING LAW. This Amendment is deemed to have been made in the
State of New York and is governed by and interpreted in accordance with the laws
of such state, provided that no doctrine of choice of law (except as may be
applicable under the UCC with respect to the Security Interest) shall be used to
apply the laws of any other state or jurisdiction.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
-3-
<PAGE>
BORROWERS:
THE PENN TRAFFIC COMPANY
By:/s/
---------------------------
Title:
DAIRY DELL
By:/s/
---------------------------
Title:
BIG M SUPERMARKETS, INC.
By:/s/
---------------------------
Title:
PENNY CURTISS BAKING
COMPANY, INC.
By:/s/
---------------------------
Title:
-4-
<PAGE>
LENDERS:
Commitment: $50,000,000 NATWEST USA CREDIT CORP.
Pro-Rata Share: 22.222224%
Lending
Office: 175 Water Street By:/s/
New York, NY 10038 ---------------------------
Title:
Commitment: $20,000,000 NATIONAL BANK OF CANADA
Pro-Rata Share: 8.888889%
Lending
Office: Empire Tower-Suite 1540 By:/s/
350 Main Street ---------------------------
Buffalo, NY 14202 Title:
Commitment: $20,000,000 FUJI BANK, LTD.
Pro-Rata Share: 8.888889%
Lending
Office: Two World Trade Center By:/s/
79th Fl. ---------------------------
New York, NY 10048 Title:
Commitment: $30,000,000 SANWA BUSINESS CREDIT
Pro-Rata Share: 13.333333% CORPORATION
Lending
Office: One South Wacker Drive
Suite 2800 By:/s/
Chicago, IL 60606 ---------------------------
Title:
Commitment: $30,000,000 BANKAMERICA BUSINESS CREDIT,
Pro-Rata Share: 13.333333% INC.
Lending
Office: 40 East 52nd Street
Second Fl. By:/s/
New York, NY 10022 ---------------------------
Title:
Commitment: $25,000,000 HELLER FINANCIAL, INC.
Pro-Rata Share: 11.111111%
Lending
Office: 101 Park Avenue By:/s/
12th Fl. ---------------------------
New York, NY 10178 Title:
-5-
<PAGE>
Commitment: $10,000,000 IBJ SCHRODER
Pro-Rata Share: 4.444444%
Lending
Office: One State Street By:/s/
9th Fl. ---------------------------
New York, NY 10004 Title:
Commitment: $10,000,000 MIDLANTIC NATIONAL BANK
Pro-Rata Share: 4.444444%
Lending
Office: 499 Thornalle Street By:/s/
9th Fl. ---------------------------
Edison, NJ 08837 Title:
Commitment: $30,000,000 MITSUBISHI TRUST AND BANKING
Pro-Rata Share: 13.333333% CORPORATION
Lending
Office: 520 Madison Avenue
25th Fl. By:/s/
New York, NY 10022 ---------------------------
Title:
AGENT:
NATWEST USA CREDIT CORP.,
As Agent
By:/s/
---------------------------
Title:
-6-
<PAGE>
AMENDMENT NO. 9 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 9, dated as of May 10, 1995 (this "AMENDMENT") to that
certain Loan and Security Agreement dated as of March 5, 1993, as amended by
Amendment Nos. 1, 2, 3, 4, 5, 6, 7 and 8 (collectively, the "LOAN AGREEMENT")
among THE PENN TRAFFIC COMPANY ("Penn Traffic"), DAIRY DELL, BIG M SUPERMARKETS,
INC. and PENNY CURTISS BAKING COMPANY, INC. (individually, each a "BORROWER" and
collectively, the "BORROWERS"), the Lenders listed therein (collectively, the
"LENDERS") and NATWEST USA CREDIT CORP., as Agent for the Lenders (in such
capacity, the "AGENT"), is made by, between and among the Borrowers, the Agent,
and the Lenders. Capitalized terms used herein, except as otherwise defined
herein, shall have the meanings given to such terms in the Loan Agreement.
WHEREAS, the Borrowers have requested that the Agent and the Lenders:
(1) increase the Maximum Revolving Credit Line; (2) change the advance rate with
respect to advances against Inventory and (3) make certain other amendments to
the Loan Agreement.
WHEREAS, the Borrowers, the Agent and the Lenders have agreed to amend
the Loan Agreement pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended as of the effective date hereof as follows:
(a) The definition of "BORROWING CAPACITY" in Section 1 of the Loan
Agreement is hereby amended by deleting the words "sixty percent (60%)" and
by substituting, in lieu thereof, the words "sixty-five percent (65%)."
(b) The definition of "MAXIMUM REVOLVING CREDIT LINE" in Section 1 of
the Loan Agreement is hereby amended to read as follows:
<PAGE>
"MAXIMUM REVOLVING CREDIT LINE: means $250,000,000, or the lesser
amount to which the Borrowers have reduced the Maximum Revolving
Credit Line in accordance with Section 2.2(b)."
(c) The definition of "PENN TRAFFIC SUBORDINATED NOTES" in Section 1
of the Loan Agreement is hereby amended to read as follows:
"Penn Traffic Subordinated Notes" means the 9-5/8% Senior Subordinated
Notes of Penn Traffic due 2005 issued in connection with the Merger."
(d) The definition of "SENIOR NOTES" in Section 1 of the Loan
Agreement is hereby amended to read as follows:
"Senior Notes" means, collectively, the 11-1/2% Senior Notes of Penn
Traffic due 2001, the 10-1/4% Senior Notes of Penn Traffic due 2002,
the 8-5/8% Senior Notes of Penn Traffic due 2003, the 10-3/8% Senior
Notes of Penn Traffic due 2004, and the 10.65% Senior Notes of Penn
Traffic due 2004."
(e) The definition of "SUBORDINATED NOTES" in Section 1 of the Loan
Agreement is hereby amended to read as follows:
"Subordinated Notes' means the Penn Traffic Subordinated Notes."
(f) The definition of "TOTAL FACILITY" contained in Section 2.1 shall
be amended as follows: The first sentence of Section 2.1 is amended by
replacing the amount "$225,000,000" appearing in the first sentence thereof
with the amount "$250,000,000."
(g) Section 8.2(f) shall be amended by deleting the words "Prior to
the beginning of each Fiscal Year," and by substituting, in lieu thereof,
the words "Within thirty (30) days after the beginning of each Fiscal
Year,"
(h) Section 13.11 shall be amended by deleting the reference to
"Anderson Kill Olick & Oshinsky, P.C., 666 Third Avenue, New York, New York
10017, Attention: Melvin S. Slade, Esq." and by substituting, in lieu
thereof:
-2-
<PAGE>
"Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Albert M. Fenster, Esq."
(i) The Commitments of the Lenders shall reflect the amounts and
percentages set forth on Schedule A to this Amendment.
2. INCREASED LINE FEE. In the event that Section 1(ii) becomes effective
the Borrowers jointly and severally agree to pay an Increased Line Fee to the
New Lender (as defined in Section 6(i) of this Amendment) in such amount as the
Borrowers and the New Lender shall agree.
3. REPRESENTATIONS AND WARRANTIES. As an inducement to the Agent and the
Lenders to enter into this Amendment, each of the Borrowers hereby represents
and warrants to the Agent and the Lenders and agrees with the Agent and the
Lenders as follows:
(1) It has the power and authority to enter into this Amendment and
has taken all corporate action required to authorize its execution,
delivery, and performance of this Amendment. This Amendment has been duly
executed and delivered by it and constitutes its valid and binding
obligation, enforceable against it in accordance with its terms. The
execution, delivery, and performance of this Amendment will not violate its
certificate of incorporation or by-laws or any agreement or legal
requirements binding upon it.
(2) As of the date hereof and after giving effect to the terms of
this Amendment: (i) the Loan Agreement is in full force and effect and
constitutes a binding obligation of the Borrowers, enforceable against the
Borrowers and owing in accordance with its terms; (ii) the Obligations are
due and owing by the Borrowers in accordance with their terms; and (iii)
Borrowers have no defense to or setoff, counterclaim, or claim against
payment of the Obligations and enforcement of the Loan Documents based upon
a fact or circumstance existing or occurring on or prior to the date
hereof.
-3-
<PAGE>
(3) The Obligations under the Loan Agreement as amended by this
Amendment constitute "Senior Indebtedness" as defined under the indentures
relating to the Senior Notes and to the Subordinated Notes.
4. NO IMPLIED AMENDMENTS. Except as expressly provided herein, the Loan
Agreement and the other Loan Documents are not amended or otherwise affected in
any way by this Amendment.
5. ENTIRE AGREEMENT; MODIFICATIONS; BINDING EFFECT. This Amendment
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written understandings about such
matter. Each of the Borrowers confirms that, in entering into this Amendment,
it did not rely upon any agreement, representation, or warranty by the Agent or
any Lender except those expressly set forth herein. No modification,
rescission, waiver, release, or amendment of any provision of this Amendment
may be made except by a written agreement signed by the parties hereto. The
provisions of this Amendment are binding upon and inure to the benefit of the
representatives, successors, and assigns of the parties hereto; provided,
however, that no interest herein or obligation hereunder may be assigned by
any Borrower without the prior written consent of the Required Lenders.
6. EFFECTIVE DATE. This Agreement shall become effective upon compliance
with the conditions set forth immediately below:
(a) The Agent has been able to obtain commitments in writing from one
or more Lenders or New Lenders (collectively, the "New Lender"),
aggregating $25,000,000 (provided that the minimum commitment of each New
Lender shall be no less than $10,000,000) and such New Lender shall agree
to be bound as a Lender under the Loan Agreement pursuant to an agreement
(the "New Lender Agreement") substantially in the form of Exhibit A
attached hereto.
(b) No Event or Event of Default shall have occurred and there shall
have been no material adverse change in the business or financial condition
of any of the Borrowers.
(c) The Borrowers shall deliver to the Agent for the benefit of the
Lenders an opinion of Borrowers'
-4-
<PAGE>
counsel in form and substance satisfactory to the Agent and its counsel
(which opinion shall cover such matters as the Agent may reasonably
request, including a statement that the Obligations under the Loan
Agreement as amended by this Amendment constitute "Senior Indebtedness" as
defined under the indentures relating to the Senior Notes and to the
Subordinated Notes).
(d) The Borrowers shall deliver to the Agent a certificate of the
Borrowers' Chief Executive or Chief Operating Officer with respect to
Section (ii) above and such other instruments and documents as the Agent or
any Lender shall reasonably request.
(e) The execution and delivery of (i) replacement Revolving Credit
Notes in the form of Exhibit C to the Loan Agreement in substitution for
the existing Revolving Credit Notes of the Lenders and reflecting the
Commitments of each Lender as set forth on Schedule A to this Amendment;
(ii) additional Revolving Credit Notes in the form of Exhibit C to the Loan
Agreement to the committing New Lender in the amount of $25,000,000 and
(iii) replacement Revolving Credit Notes from Dairy Dell in favor of each
of the Lenders (including the New Lender), such replacement Revolving
Credit Notes aggregating $500,000.
(f) The Agent shall have received an original counterpart of this
Amendment, duly executed and delivered by the Borrowers and all of the
Lenders.
(g) The Borrowers and the New Lender shall have agreed to an
Increased Line Fee as proposed in Section 2 of this Amendment.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by each party in separate counterparts, each of which is an
original, but all of which shall together constitute one and the same agreement.
-5-
<PAGE>
8. GOVERNING LAW. This Amendment is deemed to have been made in the State
of New York and is governed by and interpreted in accordance with the laws of
such state, provided that no doctrine of choice of law (except as may be
applicable under the UCC with respect to the Security Interest) shall be used to
apply the laws of any other state or jurisdiction.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
BORROWERS:
THE PENN TRAFFIC COMPANY
By:/s/
-----------------------
Title:
DAIRY DELL
By:/s/
-----------------------
Title:
BIG M SUPERMARKETS, INC.
By:/s/
-----------------------
Title:
PENNY CURTISS BAKING
COMPANY, INC.
By:/s/
-----------------------
Title:
-6-
<PAGE>
LENDERS:
Commitment: $35,000,000 NATWEST USA CREDIT CORP.
Pro-Rata Share: 14%
Lending Office:
175 Water Street
New York, New York 10038 By:/s/
-----------------------
Title:
Commitment: $20,000,000 NATIONAL BANK OF CANADA
Pro-Rata Share: 8%
Lending Office:
Main Place Tower
Suite 2540
350 Main Street
Buffalo, New York 14202 By:/s/
-----------------------
Title:
Commitment: $20,000,000 FUJI BANK, LTD.
Pro-Rata Share: 8%
Lending Office:
Two World Trade Center
79th Fl.
New York, New York 10048 By:/s/
-----------------------
Title:
Commitment: $30,000,000 SANWA BUSINESS CREDIT
Pro-Rata Share: 12% CORPORATION
Lending Office:
One South Wacker Drive
Suite 2800
Chicago, IL 60606 By:/s/
-----------------------
Title:
Commitment: $30,000,000 BANKAMERICA
Pro-Rata Share: 12% BUSINESS CREDIT, INC.
Lending Office:
40 East 52nd Street
Second Fl.
New York, New York 10022 By:/s/
-----------------------
Title:
-7-
<PAGE>
Commitment: $25,000,000 HELLER FINANCIAL, INC.
Pro-Rata Share: 10%
Lending Office:
101 Park Avenue, 12th Fl.
New York, New York 10178 By:/s/
-----------------------
Title:
Commitment: $10,000,000 IBJ SCHRODER
Pro-Rata Share: 4% BANK & TRUST COMPANY
Lending Office:
One State Street
9th Fl.
New York, New York 10004 By:/s/
-----------------------
Title:
Commitment: $10,000,000 MIDLANTIC BANK N.A. (formerly
Pro-Rata Share: 4% known as Midlantic National
Lending Office: Bank)
499 Thornalle Street
9th Fl.
Edison, New Jersey 08837 By:/s/
-----------------------
Title:
Commitment: $30,000,000 MITSUBISHI TRUST AND
Pro-Rata Share: 12% BANKING CORPORATION
Lending Office:
520 Madison Avenue
25th Fl.
New York, NY 10022 By:/s/
-----------------------
Title:
Commitment: $15,000,000 INDUSTRIAL BANK OF JAPAN,
Pro-Rata Share: 6% LIMITED, New York Branch
Lending Office:
One State Street
9th Fl.
New York, New York 10004 By:/s/
-----------------------
Title:
-8-
<PAGE>
AGENT
NATWEST USA CREDIT CORP.,
As Agent
By:/s/
-----------------------
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 47,108
<SECURITIES> 0
<RECEIVABLES> 78,412
<ALLOWANCES> 2,061
<INVENTORY> 393,161
<CURRENT-ASSETS> 529,162
<PP&E> 891,733
<DEPRECIATION> 287,366
<TOTAL-ASSETS> 1,795,016
<CURRENT-LIABILITIES> 374,396
<BONDS> 1,289,067
<COMMON> 13,568
0
0
<OTHER-SE> 19,588
<TOTAL-LIABILITY-AND-EQUITY> 1,795,016
<SALES> 844,113
<TOTAL-REVENUES> 860,028
<CGS> 662,449
<TOTAL-COSTS> 662,449
<OTHER-EXPENSES> 164,222
<LOSS-PROVISION> 687
<INTEREST-EXPENSE> 33,034
<INCOME-PRETAX> 323
<INCOME-TAX> 194
<INCOME-CONTINUING> 129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
